Your Queries – Loans: Take a fixed rate home loan only if it is for 5-7 years tenure
By Chaitali Dutta
As the interest rates are likely to rise in the near future, should I take a home loan at a fixed rate at lower rates?
If you are taking a loan with a tenure of 15-20 years, it may be better to go with a floating rate loan as the commitment for a long term may be expensive. However, if your loan is for 5-7 years, then a fixed-rate loan would be better. In the latter, you will not be allowed to pre-pay the loan.
I will retire from service after two years. My son wants to take an education loan for his higher studies. Will a bank give me the loan or should I liquidate some investments?
—Gopal S Raju
The education loan is basically the liability of the child to pay once the education is complete and she is gainfully employed. You as a parent are there as a co-borrower to ensure payment of interest during the course duration. If the loan is for a degree or a course where there are high chances of employment after completion, then you should go ahead. However, if the education is basic graduation, then using your assets would be a better choice.
Are all repo-rate linked home loans calculated on a monthly reducing balance method?
— Rajiv Charan Saxena
On paper, most banks say that they use a daily reducing balance to calculate the interest on your home loan. This is beneficial for the borrower in case there are additional repayments to the EMI. However, if the repayment is only by way of an EMI, then the interest for daily reducing balance and monthly reducing balance are almost similar.
Is female ownership mandatory for a married couple to take PMAY subsidy. The loan was taken in December 2019. The bank is denying the same point.
In the case of a married couple, either the spouse or both together in joint ownership will be eligible for a single subsidy of PMAY under CLSS.
The writer is founder, AZUKE Personal Finance Advisory (www.azukefinance.com). Send your queries to firstname.lastname@example.org